Fidelity Says Health Care Reform Law Cuts Retirees Costs

A 65-year-old couple retiring in 2011 without employer-provided retiree health insurance will need about $230,000 to pay future medical-related expenses, Fidelity Investments said in an analysis.

That’s down 8 percent from last year’s estimate of $250,000 and is the first annual decrease in the 10 years Fidelity has been making the projections.

The $20,000 decline in the estimate from last year was driven by provisions in last year’s health care reform law that expanded Medicare coverage of brand name prescription drugs once retirees’ drug costs hit a certain level.

While the savings produced by the health reform law are “a welcome relief to many seniors, it should be considered a one-time adjustment, at least for the time being,” Fidelity Executive vice president Brad Kimler in Boston said in a written statement.

Of the $230,000 needed to cover a retired couple’s health care expenses, Fidelity estimates 31 percent will go toward paying Medicare Part B and Part D premiums; 45 percent will be consumed by expenses not covered by Medicare, such as coinsurance and deductibles imposed by Medicare; and 24 percent for out-of-pocket prescription drug expenses.

A summary of the analysis, which was released March 31, is available at fidelity.com/inside-fidelity/individual-investing/2011-rhcce.